The SET management approach has much in common with the “Cultural Re-Enlightenment” archetype described by leading management scholars Andrew Hoffman and Devereaux Jennings in their recent book “Re-engaging with sustainability in the Anthropocene era.” Both approaches share an emphasis on the need to go beyond sustainable development, to focus on flourishing rather than on materialism and self-interest, to replace reductionist thinking with a sense of transcendent connectedness, and to highlight the role of localized entrepreneurs. And, just like SET management is based on virtue ethics rather than mainstream utilitarian ethics, Hoffman and Devereaux observe that "the logics of science in Cultural Re-Enlightenment will be balanced by new logics of ... religion, philosophy, and others, ones that are congruent with one another.”
A recent study interviewed owners of over twenty SET businesses in Winnipeg, Canada. Preliminary analyses of the data pointed to 5 themes evident in many SET businesses in the sample: 1) rather than compete, SET firms choose to cooperate with other organizations that offer similar goods and services (because they share the goal of improving overall well-being); 2) rather than operate with a traditional corporate culture, SET firms tend to treat employees, customers and even suppliers like family, developing a sense of community within the firm and among its stakeholders; 3) rather than hire people with the “best” resume or skills, SET firms hire employees who understand and support the organization's values and goals, and often hire people who may find it difficult getting a job elsewhere; 4) rather than burdensome and stressful, work in SET firms is typically engaging and energized (e.g, because of shared values); and 5) rather than emphasize globalization and industrialization, SET firms often harken back to times when workers, customers, and suppliers lived in the same community, and technologies were friendlier to the environment.
For a fuller review of the findings, and a list of the organizations in the study, please click here.
There is some agreement that, in addition to sustainable organizations, cities are key to addressing the Sustainable Development Goals of the United Nations regarding things like climate change, poverty, and inequality. Research suggests that cities enjoy lower pollution and higher voluntary environmental standards when they have: 1) more corporate headquarters located in them (consistent with ideas related to place-based organizing), 2) more nonprofit environmental organizations (consistent with the idea that information and action changes structures and system), 3) better educated citizens, and 4) lower economic inequality between rich and poor.
Rousseau, H.E., Berrone, P., & Gelabert, L. (2019 in press). Localizing sustainable development goals: Nonprofit density and city sustainability. Academy of Management Discoveries.
The increase in economic inequality—within and between organizations and countries—reduces overall well-being, societal trust, safety, and mental health. The emphasis on shareholder wealth maximization is an important contributor to economic inequality, because it works to maximize the economic resources distributed to shareholders and executives, and minimize the resources distributed to other stakeholders (e.g., employees, governments, community, suppliers).
In addition to shareholder wealth maximization, this paper highlights "the bidirectional relationship between societal economic inequality and organizations, and eight mechanisms that drive this relationship."
Bapuji, H., Ertug, G., & Shaw, J. D. (2019). Organizations and Societal Economic Inequality: A Review and Way Forward. Academy of Management Annals.
In good news for SET businesses trying to raise funds, a recent experiment rejected the “selfish investor hypothesis.” The study showed that investors are willing to pay a premium for shares in firms that create positive externalities and pay less for shares that create negative externalities. This is true even for people who are making investment decisions on behalf of others.
Bonnefon, Jean-Francois and Landier, Augustin and Sastry, Parinitha and Thesmar, David, Do Investors Care About Corporate Externalities? Experimental Evidence (September 23, 2019). HEC Paris Research Paper No. FIN-2019-1350. Available at SSRN: https://ssrn.com/abstract=3458447 or http://dx.doi.org/10.2139/ssrn.3458447
A study by Euromonitor International suggests that consumers are increasingly seeking out goods and services consistent with SET organizations: 68% of consumers say that having a positive impact on the environment is a priority for them, and 39% prefer to purchase fewer but higher quality products. The report, 2019 Megatrends: State of Play, can be downloaded here.
People interested in SET management will welcome a new book called The 99 Percent Economy. The book is written by Paul Adler, a highly-esteemed business scholar at the University of Southern California. Adler. writes:
"Capitalism is a system of production for profit, not for people or the planet. Yes, over the past decades and centuries capitalism has stimulated remarkable scientific and technological advances and has led to real improvements in the material conditions of many. But these improvements are only intermittent. They are shared unequally. And they come with escalating social and environmental costs. Government is dependant on the profitability of the business sector for its legitimacy and resources and therefore cannot adequately address those costs. That’s why we face a world in crisis.
"If we are to overcome these crises and create an economy for the 99 percent, we need to change the way enterprises make decisions about investment, products, and work. These decisions need to be guided by the needs of people and planet—not just by profitability considerations. They need to be made democratically, informed by deliberations and debate not only at the enterprise level, but also at the regional, industrial, and national levels—not made by CEOs and board of directors doing the bidding of private investors.” (page 3)
Adler, Paul (2019). The 99 Percent Economy: How Democratic Socialism Can Overcome the Crises of Capitalism. Oxford, UK. Oxford University Press.
A 2019 study found that 52% of individual investors in the USA have adopted sustainable investing (and 67% of Millennials), even though 64% agree that there may be a financial trade-off for doing so. This willingness to trade-off financial profit for environmental good reflects a SET perspective where social and environmental concerns have priority over profit maximization. For more details see the report from Morgan Stanley.
A recent article in the Journal of Business Ethics argues that "conceptualizing individuals as profit-maximizing actors neglects their freedom to reflect on the purposes and goals of their actions.” The authors call for the development of management theory and practice that is grounded in alternative normative assumptions. This is entirely consistent with SET management, which is grounded in virtue ethics that challenge the materialistic and individualistic assumptions and utilitarian ethics that characterize the dominant approach to management.
Moosmayer, D. C., Waddock, S., Wang, L., Hühn, M. P., Dierksmeier, C., & Gohl, C. (2019). Leaving the road to Abilene: A pragmatic approach to addressing the normative paradox of responsible management education. Journal of Business Ethics, 157(4), 913-932.
The Business Roundtable--an organization with almost 200 executives from leading corporations like Pepsi, Apple and Walmart--signalled that the mainstream business orthodoxy is moving away from the doctrine it has followed over the past twenty years. They no longer talk about the primary duty of managers and boards of directors being to serve the financial interests of corporations' stockholders. Their new “Statement of the Purpose of a Corporation” starts with "Americans deserve an economy that allows each person to succeed through hard work and creativity and to lead a life of meaning and dignity” and goes on to describe compensating employees fairly and fostering "diversity and inclusion, dignity and respect,” "Dealing fairly and ethically with our suppliers,” and "Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.